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Final Results

Media Corporation PLC

31 March 2010

Media Corporation plc

(“Media Corp” or the “Group”)

FINAL RESULTS

FOR THE YEAR ENDED 30 SEPTEMBER 2009

Media Corporation plc, a leading AIM quoted media and online gaming group, announces its final results for the year ended 30 September 2009.

Financial Highlights

• Operating loss before exceptional items reduced 11% to £2.3m (2008: loss £2.6m)
• Operating loss after exceptional items reduced 77% to £2.7m (2008: loss £11.5m)
• Cash balance at the year end £1.7m (2008: £3.8m)
• Consolidated net assets £5.9m (2008: £7.9m)

Business Highlights

• Investment in internet advertising technology increased ad-serving capacities
• Acquisition after the year end of Purple Lounge Ltd, a premium internet online gaming brand
• Removal of the Google ban after the year end which had adversely affected Gambling.com & Creditcardexpert.com

Commenting on the results, Justin Drummond, Chief Executive, of Media Corp, said:

“The Board is pleased with the progress that Media Corp has made during 2009. Despite continuing challenging trading conditions, the second half of the financial year saw significant improvements. This upturn was due to organic growth across all business units as well as a tactical cost reduction programme implemented by the Board and senior management team following a strategic review earlier in the year.

“Since the end of the financial year there has been a dramatic improvement in the Group’s fortunes. This is largely due to the acquisition of Purple Lounge and the removal of the Google ban which had adversely affected both Gambling.com and Creditcardexpert.com. This has resulted in a significant increase in revenues and a return to profitability in the first quarter of the 2010 financial year.”

ENQUIRIES

Media Corporation Plc				Tel: +44 20 7618 9000
Justin Drummond - CEO
Nilesh Jagatia - Finance Director
Astaire Securities Plc				Tel: + 44 20 7448 4400
Luke Cairns / Katie Shelton
Bishopsgate Communications				Tel: + 44 20 7562 3350
Robyn Samuelson / Gemma O'Hara
mediacorp@bishopsgatecommunications.com
Threadneedle Communications				Tel: +44 20 7653 9850
Graham Herring / Josh Royston

Chairman’s Statement

Media Corporation made good progress during 2009 despite the downturn. The first half of the year saw challenging trading conditions. However, following a strategic review by the Board, the second half of the financial year generated significantly improved results. This upturn was due to organic growth across all business units as well as a tactical cost reduction programme implemented by the Board and senior management team.

Eyeconomy

The Group's largest business division, the advertising network Eyeconomy, saw a considerable improvement in trading in the second half of the 2009 financial year with revenues increasing significantly.

Eyeconomy has run sizable and very successful advertising campaigns for a number of leading brands including Vodafone, British Gas and UPS. This division currently has a very strong pipeline of forward orders and it is anticipated by the Board that this trend will continue throughout 2010.

Publishing

The publishing business is starting to show the benefits of the significant investment that the Group has made. The re-design, development and high quality editorial content produced by the in-house publishing team has been well received and the Group’s websites continue to grow substantially.

• Sport.co.uk - As a result of excellent content and search engine optimisation Sport.co.uk has grown enormously since its launch in 2008 and it now receives over two million visitors a month.

• Onthebox.com - Following a recent re-launch, Onthebox.com has established itself as the UK's most popular online TV guide and with its enhanced features, including cinema and radio listings, its popularity is expected to continue to grow.

• Gambling.com - Sara Vincent, who successfully established and managed Casino.co.uk for seven years before its £3.6 million sale to Cryptologic, has recently taken charge of Gambling.com. Sara has been charged with realigning the business model and redeveloping the site to increase both the visibility and profitability of the website. The Company is expected to be in a position to announce a number of strategic partnerships over the coming months. These partnerships are anticipated to greatly improve both the revenues and value of Gambling.com as a strategic asset within the global gaming market.
  
  In addition, there are now renewed indications that there could be a change to the US anti-online gaming laws and a new legislative framework for online gaming in the US. These changes would be hugely beneficial for Gambling.com, the Group's principal publishing asset, and would significantly increase the profitability and enhance the value of this asset. In addition, there are now renewed indications that there could be a change to the US anti-online gaming laws and a new legislative framework for online gaming in the US. These changes would be hugely beneficial for Gambling.com, the Group's principal publishing asset, and would significantly increase the profitability and enhance the value of this asset.

Since the end of the 2009 financial year there has been a dramatic improvement in the Group’s fortunes. This is largely due to the acquisition of Purple Lounge and the removal of the Google ban which had adversely affected both Gambling.com and Creditcardexpert.com. This has resulted in a significant increase in revenues and a return to profitability in the first quarter of the 2010 financial year.

The outlook for 2010 now looks positive and the Board looks to the future with renewed confidence.

Jason Drummond
31 March 201031 March 2010

Business Review

Throughout 2009 Media Corporation continued its ongoing strategy to invest in the Group’s growth and streamline costs within the business. This investment took place in personnel and technology and resulted in more efficient operations during the financial year.

The Group has two principal divisions, Advertising Network and Internet Publishing:

Advertising Network

The Advertising Network business, Eyeconomy, was established in 1996 and is a separate operating division of Media Corporation. Eyeconomy specialises in online media planning as well as buying and managing online media campaigns for clients including AOL, Dell, T-Mobile and American Express.

The division currently:

• produces dynamic and engaging online advertising solutions including exit traffic (Subsites), rich-media floating toolbar (SubLines) and has recently launched a new online advertising division
• offers a total reach of 35 million unique users every month, from over 850 quality host sites in all major channels including Finance, Travel, Motors, Sport, Male/Female, Student/Youth, Property, Entertainment, Film, Music and TV, Mobile/Gadget and Recruitment
• produces in-house creative media
• provides a wealth of new products on traditional display advertising following acquisition of Nash Digital
• boasts a Brand team whose successful contract wins include the Express Newspaper Group, representing a potential revenue stream of over £2 million
• is seeing return value on significant presence at trade shows and in trade PR

Internet Publishing

Media Corporation has a diverse publishing division specialising in premium destinations and portals.

Our impressive portfolio of websites includes a number of market-leading sites including Onthebox.com (UK’s definitive TV listings and entertainment guide with over 2 million unique visitors per month), Sport.co.uk (sport content site with 1.7 million unique visitors), Flightcomparison.co.uk (a leading flight booking portal), Gambling.com (a comprehensive gambling and sports portal providing industry news, tips and strategies) and Creditcardexpert.co.uk (a credit card comparison website).

In addition, the Group acquired Purple Lounge (Purple-lounge.com), a premium online gaming portal, in October 2009 and the Group will use its in-depth expertise in developing and monetising the brand.

Financial Overview

The audited results for the year ended 30 September 2009 show a better overall performance of the business than the previous year despite turnover having decreased by 10.3% to £3.5m (2008: £3.9m). The operating loss of £2.7m (2008: £11.5m) included exceptional costs of approximately £371,000 relating to unrealised foreign currency exchange conversion losses, underpayment of taxation in prior years and bad debt. Net assets were £5.9m (2008: £7.9m) and cash at the end of the financial year was £1.7m (2008: £3.8m).

Key Performance Indicators (KPI’s)		FY2009		FY2008
		£million		£million
Revenue		3.5		3.9
Gross Profit		0.9		1.4
Operating Loss		(2.7)		(11.5)
Net Assets		5.9		7.9
Cash		1.7		3.8
Other non-financial KPI
Employees - Number		37		42

Current trading and prospects incorporating principal risks and uncertainties

The Board is aiming for continued growth during 2010 as we seek to maximize the potential of the Group’s Internet Publishing and Internet Advertising businesses, with Q1 2010 results already returning the Group into profitability. In October 2009, the Group acquired Purple Lounge, a premium online gaming portal with scalable infrastructure to expand further in the online gaming sector. This acquisition was in line with management strategy to focus on the online gaming sector and the Board will continue to look to strengthen the business further by strategic acquisitions in the current year.

Board changes

John Palmer was appointed as a Non-executive Director on 17 August 2009. Michael Hawkes stepped down from the Board on the same day, and the Directors would like to thank him for his significant contribution to the Group.

In addition, Chris Gorman, OBE, was appointed as a Non-executive Director of the Group on 13 October 2009.

Justin Drummond									Nilesh Jagatia
Chief Executive									Group Finance Director

Consolidated Income Statement

For the year ended 30 September 2009

				Total				Total
		Notes		2009				2008
				£000				£000
Revenue
Continuing operations				3,507				3,912
Total revenue				3,507				3,912
Cost of sales
Continuing operations				(2,617)				(2,507)
Gross profit				890				1,405
Selling and distribution costs				(276)				(638)
Administrative expenses				(2,914)				(3,318)
Exceptional loss				(398)				(8,913)
Total Operating costs				(3,588)				(12,869)
Operating loss				(2,698)				(11,464)
Finance income				39				242
Loss before income tax				(2,659)				(11,222)
Income tax expense				14				(57)
Loss from continuing activities attributable to equity holder of the company.				(2,645)				(11,279)
Loss earnings per share attributable to equity holders of the company				Pence per share				Pence per share
Basic		4		(0.90p)				(3.87p)
Diluted		4		(0.83p)				(3.87p)

Balance Sheets

As at 30 September 2009

				Group				Group				Company				Company
				2009				2008				2009				2008
		Notes		£000				£000				£000				£000
Assets
Non current assets
Property, plant and equipment				85				158				80				140
Intangibles				4,830				4,566				229				289
Investments				-				-				6,530				7,028
Deferred tax asset				8				-				8				-
				4,923				4,724				6,847				7,457
Current assets
Trade and other receivables				675				753				2,167				1,322
Cash at bank and in hand				1,697				3,809				187				2,043
				2,372				4,562				2,354				3,365
Total assets				7,295				9,286				9,201				10,822
Liabilities
Current liabilities
Trade and other payables				(1,342)				(1,369)				(927)				(1,466)
Current tax liabilities				(18)				(24)				-				-
				(1,360)				(1,393)				(927)				(1,466)
Total liabilities				(1,360)				(1,393)				(927)				(1,466)
Total assets less liabilities				5,935				7,893				8,274				9,356
Equity
Share capital		5		4,798				4,773				4,798				4,773
Share premium				12,943				12,927				12,943				12,927
Other Reserves				1,422				1,422				1,422				1,422
Translation reserve				536				(305)				-				-
Retained Earnings				(13,764)				(10,924)				(10,889)				(9,766)
Total shareholders equity				5,935				7,893				8,274				9,356

The financial statements were approved by the Board on 31 March 2010 and were signed on its behalf by:

Justin Drummond									Nilesh Jagatia
Chief Executive Officer									Group Finance Director

Consolidated Statement of changes in shareholders’ equity

for the year ended 30 September 2009

Group		Share capital		Share premium		Currency translation reserve		Other reserves		Retained earnings		Total
		£000		£000		£000		£000		£000		£000
At 1 October 2006		4,764		12,917		-		1,422		(1,991)		17,112
Profit for the year		-		-		-		-		2,830		2,830
Currency translation differencesdifferences		-		-		(471)		-		-		(471)
Share based payments		-		-		-		-		13		13
At 30 September 2007		4,764		12,917		(471)		1,422		852		19,484
Loss for the year		-		-		-		-		(11,279)		(11,279)
Currency translation differencesdifferences		-		-		166		-		-		166
Purchase of own shares		-		-		-		-		(497)		(497)
Issue of shares		9		10		-		-		-		19
At 30 September 2008		4,773		12,927		(305)		1,422		(10,924)		7,893
Loss for the year		-		-		-		-		(2,645)		(2,645)
Share based payments		-		-		-		-		27		27
Currency translation differencesdifferences		-		-		841		-		-		841
Purchase of own shares		-		-		-		-		(222)		(222)
Issue of shares		25		16		-		-		-		41
At 30 September 2009		4,798		12,943		536		1,422		(13,764)		5,935

Consolidated statement of recognised income and expenses

for the year ended 30 September 2009

				2009		2008
				£000		£000
Currency translation differences				841		166
Total income recognised directly in equity				841		166
Loss for the year				(2,645)		(11,279)
Total recognised expense for the year				(1,804)		(11,113)

All amounts attributable to equity holders of the company

Consolidated Cash Flow Statement

for the year ended 30 September 2009

		2009		2008
		£000		£000
Operating activities
Operating loss		(2,698)		(11,464)
Depreciation and amortisation		255		168
Impairment of intangibles		-		9,111
Decrease in receivables		78		172
Increase in payables		107		376
Taxes paid		-		(29)
Share based payments		68		-
Net cash used in operating activities		(2,190)		(1,666)
Investing activities
Interest received		39		242
Purchase of property, plant and equipment		(34)		(101)
Purchase of intangibles		(82)		(513)
Acquisition of subsidiary undertaking (net cash acquired)		-		(166)
Net cash used in investing activities		(77)		(538)
Financing activities
Issue of share capital		-		19
Purchase of treasury shares		(222)		(497)
Net cash used in financing activities		(222)		(478)
Net decrease in cash and cash equivalents		(2,488)		(2,682)
Cash and cash equivalents at beginning of period		3,809		6,253
Effects on exchange movements		376		238
Cash and cash equivalents at end of period		1,697		3,809

Notes to the Financial Statements

for the year ended 30 September 2009

1. General Information

Media Corporation plc (“the Company”) and its subsidiaries (together “the Group”) is engaged in Internet advertising and internet publishing. The Company is a public limited company which is listed on the Alternative Investment Market and is incorporated and domiciled in the United Kingdom. The address of the registered office is 77 Queen Victoria Street, London EC4V 4AY.

The registered number of the Company is 4058698.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Media Corporation has the following subsidiaries:

Name of Company		Proportion Held		Class of shareholding		Nature of Business
Subsidiary undertakings
Xworks Limited		100%		Ordinary		Internet Publishing
Eyeconomy Limited		100%		Ordinary		Internet Advertising
Search Focus Limited		100%		Ordinary		Internet Publishing
Newbold Publications Limited		51%		Ordinary		Internet Publishing
Result Online Limited		100%		Ordinary		Internet Publishing
Flight Comparison Limited		100%		Ordinary		Internet Publishing
Career Plus Limited *		100%		Ordinary		IT recruitment agency
Interactive Consulting Limited /TA Nash Digital		100%		Ordinary		Internet Advertising
Gaming Corp (Curacao) Limited		100%		Ordinary		Internet Publishing
Gambling.com Limited		100%		Ordinary		Dormant
* Indirectly held

2. Financial Information

The financial information relating to the year ended 30 September 2009 set out in this announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006, but has been extracted from the statutory accounts, which received an unqualified auditors' report and which have not yet been filed with the Registrar of Companies. The financial information relating to the period ended 30 September 2008 is extracted from the statutory accounts, which incorporated an unqualified audit report and which has been filed with the Registrar of Companies.

3. Accounting policies

Basis of preparation

These financial statements have been prepared in accordance with IFRS as adopted by the European Union, IFRIC interpretations, the Companies Act 2006 applicable to companies reporting under IFRS and the AIM listing rules. The financial statements have been prepared under the historic cost convention as modified by available for sale financial assets and financial assets and financial liabilities at fair value through profit or loss.

The financial statements have been prepared on a going concern basis in accordance with the Group’s accounting policies set out below which are based on the recognition and measurement principles of IFRS.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are shown below.

Fundamental accounting concept – going concern

The financial statements have been prepared on the assumption that the Group is a going concern. The accounts of the Group for the year ended 30 September 2009 show a loss including exceptional items for the year of £2.7 million.

At the date of these financial statements the Group’s ability to continue as a going concern reflects the net funds of £1.7 million cash available to the Group at the year end and the forecasts for the Group for the current financial year. On this basis, in the opinion of the Directors, the financial statements have been properly prepared on the assumption that the Group is a going concern.

Basis of consolidation

Subsidiaries

Subsidiaries are all entities over which the Group (directly or indirectly) has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded from the consolidation from the date on which control ceases.

The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement for the year.

Intra-group transactions, balances and unrealised gains on intra-group transactions are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Subsidiaries’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.

Transactions and Minority Interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of the net assets of the subsidiary.

Segmental reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those in segments operating in other economic environments.

Foreign currency

The individual financial statements of each Group Company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group Company are expressed in Pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.

Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the profit and loss account for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such monetary items, any exchange component of the gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date.

Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income and expense in the period in which the operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Sales of goods are recognised when goods are delivered and title has passed.

Sales of services are recognised when the service has been completed and invoiced to the customer.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Leased assets

Where the assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as a liability. Where a finance lease has been awarded to a group entity at a non-commercial interest rate is applied. Depreciation on the relevant assets is charged to the income statement.

All other leases are treated as operating leases. Their annual rentals are charged to the income statement on a straight line basis over the term of the lease.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

The cost of property, plant and equipment includes those costs which are directly attributable to purchasing the assets and bringing them into working condition. The Group does not capitalise interest as part of the cost of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is provided on the following tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value based on prices prevailing at the date of acquisition or revaluation, of each asset evenly over its expected useful life as follows:

Fixtures and fittings			25% reducing balance
Office equipment			25% reducing balance
Computer equipment			33.3% per annum

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Operating expenses’ in the Income Statement.

The Group reviews its depreciation rates regularly to take account of any changes in circumstances. When setting useful economic lives, the principal factors the Group takes into account are the expected rate of technological developments and the intensity at which the assets are expected to be used.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the acquisition date. Goodwill on acquisition of subsidiaries is included in goodwill and intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units that are expected to benefit from the business combination in which the goodwill arose.

In accordance with IFRS 3 ‘Business Combinations’, any excess of acquirer’s interest in the fair value of acquiree’s identifiable net assets is immediately recognised in the income statement.

Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised over their useful economic lives (3 to 5 years). Costs associated with developing and maintaining computer software programmes are recognised as an expense when incurred, subject to the capitalization criteria of IAS 38.

Trade names/Domain names

Acquired trade names/domain names are recognised where their fair value can be reliably measured. These assets are considered to have finite lives and are tested annually for impairment and carried at cost less accumulated impairment losses.

Website costs

Acquired websites are capitalised where their fair value can be reliably measured. Development of these websites are also capitalised as long as there are considered generating revenues. These assets are considered to have finite lives and are amortised on a straight line basis over their useful economic lives of 3 years.

Impairment of non current assets

The carrying amount of the Group’s assets, other than deferred income tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. Assets that have an indefinite economic life are not subject to amortisation and are tested annually for impairment.

If an indicator of a possible impairment is noted, the need for any asset impairment provision is assessed by comparing the carrying value of the asset against the higher of fair value less costs to sell or value in use (recoverable amount). An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. For the purposes of assessing impairment, the assets are grouped at the lowest levels for which they have separately identifiable cash flows (cash generating units).

Impairment losses recognised in the income statement in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (groups of units) and then, to reduce the carrying amount of the other assets of the unit (group of units) on a pro rata basis.

Impairment charges are included in the administrative expenses line item in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expenses.

Financial instruments

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents comprise cash on hand, deposits held on call with banks and other short-term highly liquid investments with original maturities of three months or less.

Trade and other receivables

Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within ‘Operating expenses’. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to ‘Operating expenses’ within the income statement.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. Loans and receivables are initially recognised at cost, being the fair value of consideration together with any associated issue costs. After initial recognition, interest bearing loans are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated taking into account any issue costs and discount or premium on settlement.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental costs (net of income taxes), is included in equity attributable to the Company’s equity holders

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Borrowing costs are expensed to the income statement unless used to fund a qualifying asset as described by IAS 23.

Current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the Group controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Share based payments Transactions

Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (‘equity-settled transactions’). In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date.

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by using an appropriate pricing model, further details of which are given in note 23.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (further details are given in note 9).

Research and development costs

Research expenditure is written off to the profit and loss account in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects.

Accounting Standards issued but not yet effective and/ or adopted.

At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following standards and interpretations which are effective for annual accounting periods beginning on or after the stated effective date. These standards and interpretations are not effective for and have not been applied in the preparation of these consolidated financial statements:

IAS 27: Consolidated and Separate Financial Statements (Amended) (effective as of 1 July 2009).

IFRS 3: Business Combinations (Revised) (effective as of 1 July 2009) includes an amendment to the treatment of minority interests (renamed non-controlling interests), amendments to the calculation of goodwill, a change to the method of accounting for acquisitions in stages, amendment to the accounting for contingent consideration and changes to the recognition and measurement of certain assets and liabilities.

IFRS 9: Financial instruments (effective as of 1 January 2013 – not yet endorsed by the EU).

IFRIC Interpretation 13: Customer Loyalty Programmes (effective as of 1 July 2009).

IFRIC Interpretation 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective as of 1 July 2009).

Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement (effective as of 1 January 2011, not yet endorsed by the EU).

IFRIC Interpretation 16: Hedges of a Net Investment in a Foreign Operation (effective as of 1 October 2009).

IFRIC Interpretation 17: Distributions of non-cash assets to owners (effective 1 July 2009).

IFRIC Interpretation 18: Transfers of assets from customers (effective 1 July 2009, not yet endorsed by the EU).

IFRIC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments (effective as of 1 July 2010, not yet endorsed by the EU).

Eligible Hedged Items (Amendment to IAS 39 Financial Instruments: Recognition and Measurement). Entities shall apply the amendment retrospectively for annual periods beginning on or after 1 July 2009.
Amendments to IFRIC 9 and IAS 39: Embedded Derivatives (effective as of 30 June 2009, not yet endorsed by the EU).Amendments to IFRIC 9 and IAS 39: Embedded Derivatives (effective as of 30 June 2009, not yet endorsed by the EU).
Improvements to IFRSs (effective date is various, earliest is as of 1 January 2009, not yet endorsed by the EU). Improvements to IFRSs (effective date is various, earliest is as of 1 January 2009, not yet endorsed by the EU).

Amendment to IFRS 2: Group Cash-settled Share-based Payment Transactions (effective as of 1 January 2010, not yet endorsed by the EU).

Amendment to IFRS 1: Additional Exemptions for First-Time Adopters (effective as of 1 January 2010, not yet endorsed by the EU).

Amendment to IAS 32: Classification of Rights Issues (effective as of 1 February 2010, not yet endorsed by the EU).

Revised IAS 24: Related-Party Disclosures (effective as of 1 January 2011, not yet endorsed by the EU).

The directors anticipate that the adoption of these standards and interpretations will not have a material impact on the Group’s financial statements in the period of initial adoption with the exception of IFRS 3: Business Combinations (Revised), which will require transaction costs arising on business combinations to be expensed to the income statement as opposed to the existing treatment of capitalisation, in the event that acquisitions are undertaken.

Significant judgments, key assumptions and estimates

In the course of the preparation of the financial statements, the Group has made the following significant estimates:

• Estimates of the future cash flows of the Group’s subsidiaries upon which goodwill is carried, in order to arrive at whether an impairment provision is required. These have been based on each subsidiary’s budgets for 2010 and projections for 2011 and 2012 with expected growth rates and discount rates.
• Judgements made on the estimates of the useful life of property, plant and equipment, as set out in the relevant accounting policies above.

4. Segmental analysis

As at 30 September 2009, the Group’s continuing business is classified by management into two main segments.

The primary segment results for the year ended 30 September 2009 are as follows:

		Advertising Network		Internet Publishing		Group
		£'000		£'000		£'000
Revenue
Total segment revenue		2,602		905		3,507
Operating loss		(521)		(2,177)		(2,698)
Net finance income						39
Loss before income tax expense						(2,659)
Income tax expense						14
Loss from continuing activities						(2,645)
Balance sheet
Assets		1,072		6,223		7,295
Liabilities		(634)		(726)		(1,360)
Net assets/(liabilities)		438		5,497		5,935
Other information
Depreciation and amortisation		(37)		(218)		(255)

The segment results for the year ended 30 September 2008 are as follows:

		Advertising Network		Internet Publishing		Group
		£'000		£'000		£'000
Revenue
Total segment revenue		2,529		1,383		3,912
Trading profit		(413)		(2,157)		(2,570)
Impairment of intangibles		-		(9,170)		(9,170)
Net Gain on sale of non current assets		-		276		276
Operating (loss)/profit		(413)		(11,051)		(11,464)
Net finance income						242
Loss before income tax expense						(11,222)
Income tax expense						(57)
Loss from continuing activities						(11,279)
Balance sheet
Assets		891		8,395		9,286
Liabilities		(1,224)		(169)		(1,393)
Net assets/(liabilities)		(333)		8,226		7,893
Other information
Depreciation and amortisation		(120)		(9,159)		(9,279)

The above disclosures are consistent with how management reports information internally for the purpose of evaluating the Group's performance and for making decisions about future allocations of resources to the Group.

Under the definitions contained in IAS 14 the only material geographic segment that the Group operates in is the UK.

4. Loss per share

			2009			2008
			£000			£000
Loss for the purpose of basic and diluted earnings per share			(2,645)			(11,279)
Numbers
Weighted average number of ordinary shares for the purpose of basic earnings per share			293,467,124			291,927,298
Effective of dilutive potential ordinary shares:
Share warrants			25,084,931			-
Weighted average number of ordinary shares for the purpose of diluted earnings per share			318,552,055			291,927,298
			Pence			Pence
Loss per share – basic			(0.90p)			(3.87p)
Loss per share – diluted			(0.83p)			(3.87p)

Basic loss per share has been calculated by dividing loss for the year by the weighted average number of ordinary shares in issue during the year.

Diluted loss per share has been calculated by dividing loss for the year by the weighted average number of ordinary shares in issue during the year adjusted to assume conversion of all dilutive potential options/warrants. Losses are not subject to dilution.

5. Share capital

		2009		2009		2008		2008
		Number		£000		Number		£000
Authorised
Ordinary shares of 1p each		814,566,400		8,146		814,566,400		8,146
Deferred shares of 4p each		46,358,400		1,854		46,358,400		1,854
				10,000				10,000
Allotted, called up and fully paid
Ordinary shares of 1p each		294,436,389		2,944		291,927,298		2,919
Deferred shares of 4p each		46,358,400		1,854		46,358,400		1,854
				4,798				4,773

2,509,091 Ordinary 1p shares were issued to Rivington Street Holdings pursuant to contractual obligations for services provided to the Company and the average price of the shares at the issue date was 1.64 pence.

Share warrants

During the year 16,500,00 warrants exercisable at 5p per share were replaced with new 27,250,000 warrants at exercisable price of 1p which were granted to employees and directors. The warrants give right to subscribe for new shares for a period of three years from the grant date.

6. Events after the balance sheet date

1,750,000 Ordinary 1p share warrants were exercised by former employees of Media Corporation Plc.

Media Corporation Plc acquired the entire share capital of Purple Lounge Limited, an internet gaming company. The maximum consideration for Purple Lounge is £0.465m, all of which will be satisfied by way of an earn-out, payable over a period of up to 5 years.

7. AGM notice and availability of accounts

The annual general meeting will be held at 11am on Wednesday 28 April 2010 at the Company’s registered office of 77 Queen Victoria Street, London EC4V 4AY. The notice of annual general meeting and proxy materials will be posted to shareholders with the 2009 Annual Report and Accounts on 31 March 2010. These will also be available at the Company’s registered office and website, www.mediacorpplc.com.